HOW MUCH ARE XM SPREAD AND COMMISSION? HOW TO CALCULATE IT?

It is believed that spread and commission are always the main concerns when traders want to choose a forex broker. That’s why many forex traders have asked us about XM spread and commission, since XM is one of the best forex brokers in 2018. However, traders should know that spread is not the ultimate factor to decide whether a broker is good or bad. Spread is just one of the 5 most important factors that everyone should consider when choosing the best forex brokers.

There are 2 types of traders, which are long term investors and scalpers. Long term investors don’t care about spreads much because they open just a small number of orders each year but those are extremely high volume orders. They can win up to hundreds pip per order. So for them, the spread rate ranging from 1 to 2 pips is acceptable. They only care about the broker’s credibility, quotes quality, and swap. On the other hand, when it comes to scalpers, they do care about spreads. It is because they open a lot of orders daily. So they have to pay a lots for spreads. They only win some pips per trade. So 1 or 2 pips spread really matters to them. They prefer those lower spread brokers.

However, spread should not be the only thing to pay attention. A lot of things contribute to the total trading cost of a broker, so I would like to recommend a broker that has reasonable trading cost and is one of the top largest forex brokers. That is XM.

How much are XM spread and commission?

If you only look at XM spread and commission, you might think their spreads are high. It is actually the opposite, XM spreads are in top lowest spread brokers. Let me explain to you now.

According to real data tracking, XM spreads for 6 main currency pairs such as: EUR/USD, USD/JPY, and GBP/USD… are around 1.7 pip. Their spread rate is just the same as their main competitors in the forex market like FXCM, FXTM, Forex.com, or FxPro…

However, when we talk about spread and commission, it means that we are referring to the trading cost. What does the trading cost of a broker include?

Spread

Commission

Swap

Slippage

Bonus

Rebate

XM spread and commission are similar to other best forex brokers. For swap, they charged the same amount as bank interests. So, they are not much different. For slippages, there isn’t any complaints about XM slippages that I know about. Their quotes are really good, if not the best in the market.

You can see that XM spread, commission, swap, and slippage are the same as other broker. So the things that make the differences are bonuses and rebate. XM is the only broker who offers the best bonuses and rebate compared to other top brokers.

When you first register an account in XM, you can instantly claim a 30-dollar welcome bonus from XM. This is not a high value bonus but the real benefit of it is that you can withdraw the profit made from this bonus much easier than other brokers’. You just need to trade 0.1 lot to withdraw the profit.

You also can get the 100% deposit bonus of XM. There are not many brokers that can offer this type of bonus. Why? Because at XM, you can withdraw all of the bonus profit. It means that this is a real bonus. Clients can withdraw bonus profit, so it costs brokers a lot of money.

XM rebate program will rebate you from $3 to $10 per lot traded. It means that they will rebate 0.3 – 1 pip per ___/USD lot. Moreover, the longer you trade with XM, the higher the amount of rebate you will get. So let’s calculate the whole thing again. At the beginning, XM charges us 1.7 pip spread for EURUSD. But they will cashback us on Bonus and rebate programs. So, the final spreads are around 1 pip. The good thing is their quote quality is in very good. So, that why the winning rate of XM clients are higher than other brokers.

About XM commission

Just like all other best ECN brokers, XM charges traders commission for trading ECN because their ECN spread is nearly zero. So, the main income of ECN brokers is commission. XM charges $6 of commission for ECN trading. This seems to be a normal commission rate. But actually, it’s lower than many other ECN brokers.

Conclusion: XM original spreads are normal and just as much as other top forex brokers. Yet, they offer welcome bonuses, deposit bonuses, and rebate programs. So, the final calculated spreads are much lower than that of other brokers. They are just around 1 pips. And there you have it. A broker among the top best forex brokers in the world that has very low transaction cost.

What is spread?

Spread is the difference between the Ask price and the Bid price. It is the transaction fee that you must pay for the brokers or banks. The unit of spread is pip. The higher the spread, the higher the trading cost. That’s why most traders want to trade with the low spread brokers.

There are 3 types of forex brokers: Market Maker, STP, and ECN. For first 2 types, their main income is spreads. That’s why their spreads are much higher than that of ECN brokers. When they get quotes from liquidity providers, they will add the transaction fee (spread) to those quotes. For ECN brokers, they will provide the exact quotes that liquidity providers provided. Therefore, they have to charge commission as it is their main income.

How to calculate spread?

At XM, when you open a position to buy EUR/USD, there will be two prices appearing on your MT4 platform screen:

Ask = 1.12345 and Bid = 1.12359.

Therefore, the spread now is Ask – Bid = 0.00014 = 1.4 pip. So what does this “1.4 pip” mean? It means that you have to pay 1.4 pip for XM to open an order to buy EUR/USD.

Now if you want to buy 1 lot of EUR/USD, the spread you have to pay is 100,000 x 1.4 x 0.00014 = 19.6 USD. That’s how you calculate the spread.